Steel demand weakens as price of oil drops

Chairman Janiece Longoria said steel imports are returning to more typical levels after an unprecedented shale-fed surge the last few years.

Chairman Janiece Longoria said steel imports are returning to more typical levels after an unprecedented shale-fed surge the last few years.

Photo: Steve Gonzales /Houston Chronicle

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Steel pipes for hydraulic fracking are sorted by fork lifts and taken to freight trains for delivery at the Port of Houston. The Port Authority expects about 4 million tons of steel imports for 2015 and around 3 million to 4 million tons next year. less

Steel pipes for hydraulic fracking are sorted by fork lifts and taken to freight trains for delivery at the Port of Houston. The Port Authority expects about 4 million tons of steel imports for 2015 and around ... more

Photo: Houston Chronicle File Photo

Steel demand weakens as price of oil drops

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HOUSTON — Steel imports that rose to record levels through the Port of Houston to support shale-boom construction projects have begun to plummet along with the price of crude and activity in the oil patch.

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Janiece Longoria, chairman of the Port of Houston Authority, noted the drop in her remarks during the Breakbulk Americas conference in Houston last week. She said steel imports are returning to more typical levels after an unprecedented surge the last few years. Houston is the No. 1 steel-importing port in the U.S.

Nearly two-thirds of the steel that came into Houston’s port arrived at docks operated by the Port Authority. Executive director Roger Guenther said that amounted to more than 6.5 million tons of steel, more than double the 30-year average of 3 million tons annually. Steel is the Port Authority’s No. 1 breakbulk commodity import.

Imports stayed high until a few months ago, Guenther said, but now the Port Authority expects about 4 million tons for 2015 and around 3 million to 4 million tons next year.

Much of that steel was headed for oil and gas projects in the Eagle Ford Shale area, where activity is slowing, he said.

Overall steel imports to U.S. ports are down about 38 percent, said John Foster, president of Kurt Orban Partners, a steel trading company, and chairman of the American Institute for International Steel.

“The demand for pipe products has literally fallen off the table,” Foster said.

Port representatives, ship operators, equipment providers and stevedore companies were among those gathered for the Breakbulk Americas conference, now in its 26th year. As the largest breakbulk port in the country — breakbulk is cargo that isn’t shipped in a container or tank and includes things such as pipes and tractors — Houston hosts the annual conference.

Steel was just one point made on Wednesday, but an important one for Houston as the city keeps an eye on the effects of low oil prices.

Breakbulk shippers, which help move much of the heavy equipment used to drill, and many of the companies attending the conference, which specialize in making cranes and forklifts, custom packing equipment, coordinating logistics, stevedoring and operating ships, also are feeling the effects of the decline in oil production.

“Volumes overall are down with our customers,” said Kevin Sharp, country sales manager for Panalpina’s energy solutions group, a logistics company. The company has offices all over the world, but in Houston, 95 percent of its business is energy-related, Sharp said.

Liquefied natural gas, refinery and petrochemical projects are giving these companies some relief.